First of all, it is important to know what exactly Blockchain is, “Blockchain is a distributed, decentralized ledger.” As its definition may sound a bit confusing but it is one of the easy technology to understand. As the name Blockchain is made up of 2 words ‘block’, ‘chain’, a block is in context with a block of digital information stored in chain i.e. public “database”.
Digital pieces of information forms ‘Blocks’ on the Blockchain which have 3 parts specifically:
- One of its parts stores information about transactions eg., time, amount & data.
- Another may store information about the transaction participants eg., name of person transacting but not exactly name, different identifying information like ‘digital signature’, etc.
- Distinguishing between blocks is important so some blocks store information that helps in distinguishing different blocks, each block stores a “hash” which is a unique code.
The actual format in the case of Bitcoin is different, a single block can store up to 1MB of data in the case of Bitcoin. Working of blockchain is very simple, to add a block in blockchain following 4 tasks are done:
- Make a transaction
- Verify that transaction
- That transaction is stored in a block
- That block is given a hash
After the adding of a new block, it becomes publicly available for anyone for viewing.
In a bitcoin Blockchain, you can access transaction data, by whom, where & when the block was added to the blockchain. Blockchain technology has issues of security but also can be considered secure at the same time as to change a single block a hacker has to change every block after it on the blockchain. It has to recalculate all hashes used and would take an enormous and improbable amount of computing power. One can say after the block is added to the blockchain it becomes very difficult to edit and impossible to delete.
- Better accuracy in verification by removing human involvement
- By eliminating third-party verification cost is reduced
- Private, secure, and efficient transaction
- Technology is transparent
- Significant technology cost for mining bitcoin
- Low transaction rate per second
- Illicit activities’ history
- Susceptibility of Hacking